It might finally be time to get readers to pay for website content
After his website's ad revenue started to drop, Craig Seitam decided to switch to a subscription model. Along the way, he discovered one important truth: 'It's all fun and games until someone asks for a credit card number.'
It’s exactly one year since we transitioned CompetitionsGuide.com.au from a 100% free service to a paid subscription model.
Why would an established website make such a radical change after so many years of success? Visitation was as good as it had ever been. The answer is no surprise: like the majority of the online and offline publishing industry, revenues were flattening.
Our business model comprised mostly of sponsored listings, that is, companies or agencies paying us to achieve volume traffic through to their campaign. This was almost always on a cost-per-click or cost-per-lead basis. Google AdSense was also a significant earner, as it displayed extremely targeted competition campaigns to our members.
As an advertiser I love Google and Facebook. Together they account for 100% of our promotional spend in attracting new members to Competitions Guide.
As a publisher who also happens to compete with both Google and Facebook for advertising dollars, this in itself is a problem.
The duopoly of Google and Facebook have sucked advertising revenue out of our local media industry. The solutions offered tend to involve cleverer ways to attract advertising funds. But, they all lead to the same thing, and that’s getting advertisers and sponsors to pay so that the consumer can have a free ride.
Two years ago we had looked at multiple methods of revenue increase. It wasn’t until October 2016 that the idea of changing to a subscription model was floated. On paper, the idea was logical. If our members used our site daily, every few days, or even on a weekly basis, it seemed feasible that they would pay a small annual subscription to keep enjoying the service.
I was positive but sceptical. I’m sure most website owners have a fantasy of charging their members a fee for use, but the reality is most of us don’t go there. It’s all fun and games until someone asks for a credit card number.
In the first few days of January 2017, a pop-up box explained to our members why the site would be moving to paid subscription. We were fully transparent, explaining that the revenue we made from ads and sponsors had fallen, and that an annual subscription of $36.00 (marketed as the equivalent of $3 per month) was required if they wanted to access the full site offering.
Amidst a collection of protest emails and nasty Facebook messages our ‘Go Premium’ offer kicked off relatively well, for a few days at least, before subscriptions dropped rapidly. Many of our most loyal members paid without hesitation, but most were standoffish.
New members joined as a free standard member, before seeing the paywall and bouncing away. In the first month, our conversion of first day new members from free to premium stood at 0.7%. Extremely disappointing.
It seemed obvious that we were losing members to our free competitors, who had no doubt received a windfall as the result of our actions. Then again, when we were free, our members chose our services over theirs, so did ten cents a day make such a difference? In most cases, absolutely yes, parting with 36 bucks was simply too much to outlay, but for others it was the simple principle of paying for something that used to be free.
I figured that our biggest fixable problem was that for $36, all we had changed was adding a digital tollbooth, offering nothing new in return. In a perfect world we would have simply added premium subscription to our paid content and lived happily ever after.
We needed to rethink our content offering. A large part of our sponsored listings were competitions that are known as co-registration, that is, a single competition that can generate dozens of leads to different companies, resulting in a landslide of phone calls and emails to our members.
Google AdSense banner ads often reflected these same competitions. The combination of both was providing a negative member experience.
Our distinct competitive advantage came from the decision to go virtually ad-free. I say ‘virtually’, as although we have removed 100% of our banner ads, we retained a small portion of sponsored listings that we saw as acceptable to our members.
And so it goes. A year has almost passed since our new strategy launched. The most obvious question we get asked is ‘how many premium subscribers?’, which I politely decline – simply because it discloses our revenue.
What I am happy to share are some key numbers:
- The back half of 2017, revenue increased by over 42% versus the same period the previous year
- Of that, premium subscription accounted for 76% of total revenue
- In the same period, ‘First Day Upgrades’ were 11%. Remember, when we launched in January 2017 it was only 0.7%!
Is it time to get customers to pay for website content? To us, the answer is obviously yes, and not just in our case. Does this mean all content-based websites can go premium?
Let me ask this in a different way.
Is your website (or your client’s) good enough that those who visit it will pay a small amount to continue?
Whatever metric used to value a website, there is nothing that defines loyalty as much as a consumer willing to pay to use it. Plus, selling ads is nice, but from personal experience, there is no greater satisfaction than selling an online subscription.
I look forward to more websites taking the plunge.
Craig Seitam is marketing director at CompetitionsGuide.com.au.
Hi Craig
This is a fascinating topic and I fully believe in the subscription model – I think it should be the backbone of every online business. It’s great that you took the plunge, and then modified. Most people would have given up after the 0.7% first go!
I think it’s different types of subscription for different businesses, if your content is a source of organic traffic then you wouldn’t want to paywall it all – but I DO see how a ‘content upgrade’ strategy could work for sure.
Well done for what you’ve achieved in such a short space of time and for being perceptive enough to see that your business model needed to change. It’s a brave step.
I have a question though: do you think you could now offer a higher tier membership to those people who are paying for the $3/month and loving it? Do you have a way to work out who are the most frequent/devoted users?
Rossco
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Amazing story. Really pleased for you.
I did a bit of a double take, as it kind of implied that the principle improvements in the value proposition were getting rid of paid listings and getting rid of ads?
Was that all it was? Or was there something else?
If there was something else, how did the cost of that compare with the revenue hike?
And finally, of course, you don’t mention if it’s profitable….?
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Hi Rossco,
Thanks for the feedback! Our organic traffic has generally been above 60%. We don’t paywall the entire site, but we are extremely tight about the amount of content we give away for free. The more we give away, the less subscriptions, it’s that simple.
In terms of higher tier membership, it’s not something I can see at this stage. This is simply because aside from access to full content, there’s not much else that we have to sell our members.
Regards,
Craig
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Hi Nick,
Thanks, appreciate it!
Removing paid content and ads was a significant factor in increasing subscription conversions, but this was only part of the equation.
I could write a chapter on conversion techniques that I know now, but didn’t then. But, everything keeps coming back to quality of content – if we drop the ball there, everything else is history.
Profitability-wise, I did mention that revenue rose by 42% in the back half of 2017. I should have referred to this as Gross Profit, as the figure is nett of both GST and merchant fees.
So yes, the move has been incredibly profitable.
regards,
Craig
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All I see is Join Free. I’d be mighty pissed off if I gave you my details to then find if I want what’s on the surface I’d have to pay for it without prior warning/knowledge.
Any mention of the Premium Services are buried in the Terms of Service without any mention of subscription rates, totally misleading and the faster our consumer laws catch up regarding online business models the better.
Also this:
(https://www.competitionsguide.com.au/about.asp)
“We don’t need or want your info – We don’t want your phone number, address or anything that should be considered private.”
This business model is so shifty.
Rant over.
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Hi Stuart,
No problem with the rant, you’ve raised some good points. But I will take you up on the ‘shifty’ comment, as you’d expect me to.
Competitions Guide is free to join, and Standard Membership entitles a member to a small sample of competitions on the first page, which changes most days.
Our Terms of Use is quite brief and discusses the two types of memberships, but also on our FAQ page (https://www.competitionsguide.com.au/faqs.asp) the 3rd to 8th points are all about Premium Subscription. I just ran a check and our FAQ page was accessed 2,658 times in December, so it is getting read.
If a member joins and doesn’t upgrade, it costs them nothing, and we make nothing. We have no advertising or paid listings directed at Standard Members, and we send no 3rd party marketing emails.
In regards to the concern about personal information, we ask only for First Name, Email Address, Gender, State and Age Range. We don’t ask for Last Name, Phone Number or Address. We have absolutely no need for these. If a Standard Member doesn’t open our daily email in any 30 day period, it’s the last they’ll hear from us.
I hope this addresses the concerns you raised.
Regards,
Craig
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I had assumed some time ago that the effect of large aggregators like FB was that small sites could not make money on advertising alone. Even the big news media have conceded as much.
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Hey Craig, it’s been a long time! Great story. Thought you may be interested in reading up about http://dietdoctor.com. Andreas moved to a subscription model (US$9 per month) and is killing it with 40,000 members and 15 full time employees paid for entirely by the site.
https://www.dietdoctor.com/weve-passed-40000-members
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Hi Investor,
It’s not just Facebook or Google that have been eroding paid revenue. Prior to going to Premium, sponsored marketing emails that we sent were getting less than half the click-through rates of 3 years prior. Plus, many of the competition campaigns making up our paid listings had been around for almost a decade, and were reaching saturation.
Regards,
Craig
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Hi Matt,
Nice to hear from you, and always good to see a success story in the premium subscription arena!
Methods in the US don’t always transfer well into this market, but there’s always a clue or two that can be gained.
Thanks again,
Craig
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